A Review of the Nigerian Energy Industry

Delta State: Moving beyond oil as sole revenue

02 July 2015, Lagos – Characteristic fluctuation in the price of oil in the international market has, over the years, triggered corresponding uncertainty in the Nigerian economy. The yo-yo reaction of the economy of this country at the federal and state levels is a clear indication of Nigeria’s over-dependence on revenues from oil mineral.

Oil-DrumsAt this point in time, not a few state governments in the federation have buckled under immense pressure resulting from the nation’s dwindling oil receipts. Complaints of arrears of unpaid monthly salaries of workers have become the order of the day with most states and even at the federal level.
The fact that a sitting governor could recently openly declare his helplessness in addressing the problem of more than six months unpaid salaries of his workers clearly shows how precariously the states are tied to the apron strings of the Federal Government under a mono-cultural economy.

Over-dependence on Oil
This sorry situation in the federating states today has arisen because not only does oil constitute the mainstay of the economy of Nigeria, contributing more than 80 per cent of her monthly revenue, all the states depend almost entirely on oil money shared among the federal, state and local governments every month.
Budgets at the different levels have, therefore, been based on projections of oil price trends in the international market. Budget performance is always at the mercy of oil prices. Thus, the states are often bogged down by huge debt profiles and stagnation of development.
Variation in Delta
Over the years, the economy of Delta State has, like the others, often depended mainly on monthly allocations from the Federation Account as internally generated revenue (IGR) was paltry and insignificant. Efforts at developing internal sources of revenue received little attention.
Consequently, up to 2007 Delta State’s IGR was meagre and averaged about N1.2 billion monthly. This unsatisfactory situation was not ameliorated until 2009 when the comprehensive reform measures introduced by the administration of Dr. Emmanuel Uduaghan, who assumed office as Governor in May 2007, began to bear fruits.

Growing Internal Revenue
Perhaps, the passage of the Delta State Consolidated Revenue Law enacted during the period was the tonic needed to turn around the fortunes of IGR in the state. Hitherto, the Delta State Board of Internal Revenue (DBIR) was headed by the most senior civil servant, then known as the ‘administrator’; and, the business of the board was conducted in the lacklustre fashion typical of the civil service in the country.
However, the new law empowered Uduaghan to appoint professionals outside the civil service structure to oversee the management of tax in Delta State, with the board authorised to report directly to the Governor.
Subsequently, Uduaghan reinvented the DBIR with a renowned tax expert, Mr.  Joel Onowakpo-Thomas as Executive Chairman of the Board mandated to radically improve the process of revenue drive with a view to substantially increasing the internally generated revenue (IGR) of Delta State.
Thus was the tone for the transformation of the revenue generation and collection agency set, as the new board swung into action aimed at revolutionising the revenue generation process through comprehensive capacity-building machinery for the various categories of the Board’s staff vis-a-vis the entrenchment of a new work culture.
Novel Strides
Initiatives introduced between 2009 and 2011 to plug all identified leakages were accompanied by a regime of public enlightenment through a media campaign blitz on civic responsibilities of tax payment by individual citizens and corporate bodies. However, the new information and communication technology (ICT) represents the turning-point in Delta State’s tax revolution.
This involved the full automation of the whole revenue system and activities, including the BIR (board of internal revenue) zonal offices in Ughelli, Deco Road Warri and the BIR headquarters in Asaba, with satellite linkage to the headquarters in Warri.
In line with the automation of the entire collection process, the e-receipts process, a stronger legal and enforcement process for the board, the introduction of the Tax Professionals Scheme to ‘trap’ all available companies in the state, and an aggressive attempt at consolidating all revenue collecting ministries, departments and parastatals.

Higher IGR
Currently, the board generates a monthly IGR of N4.2bn, with a total of revenue collected from all sources put at about N255.298bn during the period under review. Overall, the DBIR has been able to increase revenue collection by about 550 per cent during the period covered, but experienced a dip in revenue in 2013 when Shell and Chevron, the state’s largest formal taxpayers decided to divest. However, there is a projected increase in the tax revenue by 70 per cent under ongoing processes already being put in place by Joel-Onowakpo.
The unveiling of the multi-million naira headquarters of the DBIR and 25 modern tax office buildings across the state in May, 2015 was the icing on the cake for an organisation that was run like every other civil service organisation before Onowakpo-Thomas took over under the Uduaghan reforms of the sector.
Apart from ‘Revenue House’ complex, that is DBIR headquarters in Warri, a glasshouse headwaters annex has been built in Asaba while five modern zonal offices have been completed in Agbor, Effurun, Ughelli, Oleh as well as in Otu-Jeremi and Oghara. Moreover, a data recovery centre has been cited in Koko, while 10 additional offices have been built in Ogbe-Ijoh, Ovwian, Sapele, Patani, Burutu, Ozoro, Ashaka, Ogwashi-uku and Issele-Uku.

Vibrant Workforce
It is noteworthy that the workforce constitutes the virtual magic wand for outstanding performance of the Board. Novel innovations by the board included the unprecedented increase in staff salaries, which was a deliberate move to stem the tide of pilfering the accruing revenue vis-à-vis an aggressive technological training for staff on electronic-based operation.
As a matter of fact, the salaries of staff were increased sharply by about 3,000 per cent by the board to ensure that compensation did not become a distraction. One of the ways the board also motivated employees was through the acquisition of about 82 modern vehicles as further motivation especially for field staff.

Governor Ifeanyi Okowa of Delta State
Governor Okowa

The board chairman said series of overseas training were organised for staff with intent to acquire most recent taxation skills in four countries to make DBIR the best amongst equals. At least 64 generating sets have been procured and distributed to the offices as alternative power supply. He added that the state had also launched the Board ICT in line with global practices. Uduaghan solicited the cooperation of the people in order to achieve the Delta-Beyond-Oil initiative.

Delta Beyond Oil
As part of its avowed contribution to the Delta Beyond Oil initiative of the Uduaghan, the DBIR under the leadership of Thomas, coordinated the production of a book in two volumes, christened ‘Delta Beyond Oil: A Quest for Sustainable Development’. Put together by core academics and professionals drawn from several universities and research institutions across the country, the two volumes of which were launched at the DBIR headquarters by Uduaghan, propagates the laudable objectives of the Initiative.
Going by current performance, the state IGR is expected to fund 100 per cent of the state’s recurrent expenditure in the medium term. The Board also targets internally generated revenue of about N73 billion in 2015 alone, with the projected inclusion of 100,000 taxpayers from the informal sector and addition of at least 10 professional/market associations.
Impressed with the giant strides made by the board, Uduaghan noted that the activities of the board have assisted him in his vision for a ‘Delta Beyond Oil’.
The whole essence of the comprehensive restructuring of the DBIR is to meet the current challenges of an efficient contemporary tax management organisation. In this regard, the Enforcement and Compliance Department makes the DBIR an aggressive dog that can bark as well as bite.
Accordingly, no less than 55 cases have been successfully prosecuted with over N1.2bn recovered from defaulting corporate bodies and individuals since the beginning of the current board. More funds are expected to be raked in from several pending cases.
Delta Beyond Oil, therefore, goes beyond mere sloganeering but indeed represents the inevitability of diversification of the economy of the state. It offers the ultimate template for sustainable development of Delta State in the face of dwindling oil receipts or even cessation of oil revenue in future. The vision holds the greatest and most realistic promise for appropriate development of other sectors like the vast agricultural resources and agro-allied businesses, which has great potentials for effectively tackling unemployment challenges.
With the green light given by Governor Ifeanyi Okowa (Uduaghan’s successor) that the vision would be sustained and expanded, the place of the DBIR in the consolidation of the Delta Beyond Oil vision appears assured. What remains to be done, perhaps, is increased enlightenment of the citizenry to the individual and collective benefits of a Delta State economy that transcends oil.


– Omon-Julius Onabu, This Day

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